International Capital Market Practice and Regulation

• ICMA engagement and materials: Meetings with the EC, EP and Council representatives. ICMA published its feedback on the EC proposal in May 2022 and a briefing note in September 2022. ICMA is a member of the UK Accelerated Settlement Taskforce.

Contacts: Andy Hill and Alexander Westphal.

Working Group/Lead Committee: CSDR-SD Working Group/Secondary Market Practices Committee (SMPC).

More information: The Secondary Markets section of this Quarterly Report and ICMA’s dedicated webpage.

EU MiFIR and UK Wholesale Markets Review

• Regulatory initiatives:

- EU Review of the Markets in Financial Instruments Regulation (MiFIR) and certain elements of Markets in Financial Instruments Directive (MiFID).

- UK Wholesale Markets Review (WMR).

• Key issues: Pre- and post-trade transparency and consolidated tape for bond markets, SFT reporting.

• Key messages: ICMA members would like to see the introduction of an effective, appropriately calibrated and dynamic post-trade transparency regime for all bonds, including corporate and sovereign bonds. In particular, large and extra-large illiquid trades should benefit from delayed publication of both price and size to prevent undue risk to counterparties involved. Once deferrals have expired, all bond trades should be published in a centralised place (a single-source bond consolidated tape) on a trade-by-trade-basis. Separately, ICMA is advocating for all SFTs to be exempted from EU MiFIR transaction reporting because the MiFIR regime does not cater for the specific nature of SFTs and is inconsistent with SFT Regulation (SFTR). In the UK, SFTs with the Bank of England have already been removed from the scope of UK MiFIR reporting.

• Legislative stage:

- EU: The Council and the EP have both finalised their respective positions (MiFIR/MiFID and MiFIR/ MiFID) on the EC’s MiFIR review proposal of November 2021 and are about to enter into trilogue discussions to agree on a final compromise text. Trilogues are expected to be finalised by the end of the Swedish Presidency of the Council in June 2023.

- UK: The Financial Services and Markets Bill (FSMB), published in July 2022, will introduce powers for HM Treasury to repeal the current UK MiFIR (as well as other retained EU financial services regulation) and introduce a new regime in line with the March 2022 outcome of HM Treasury’s July 2021 WMR consultation. In some areas, including UK MiFIR, the FSMB amends the current legislative framework, for example to simplify the fixed income transparency regime. As part of the Edinburgh Reforms, HM Treasury is also committing, alongside the UK Financial Conduct Authority (FCA), to having a regulatory regime in place by 2024 to support a consolidated tape for market data. Reportedly, the FCA is planning to publish consultations on a consolidated tape in June 2023 and on fixed income and derivatives transparency requirements in October 2023.